Solution to In-Text Exercise 17.3:
Recalling the results from In-Text Exercise 17.2, KCCs sales quantity was 3,000 cubic yards of
concrete and price was $70. KCCs marginal cost in In-Text Exercise 17.2 was $40. In a
competitive market, P = MC, so the mark
Solution to In-Text Exercise 17.2:
In In-Text Exercise 17.1, we determined that KCCs inverse demand function is P(Q) = 100
0.01Q and its marginal revenue function is MR = 100 0.02Q. To determine the profitmaximizing output for KCC, we first satisfy the q
Solution to In-Text Exercise 14.5:
The first step towards solving this problem is to set supply and demand equal and solve for the
equilibrium price. Setting 5P 6 = 15 2P and solving yields an equilibrium price of $3. The
amount bought and sold in this eq
Solution to In-Text Exercise 9.3:
The quantity rule tells us that Dans best positive quantity involves producing where P = MC,
which yields P = Q.
Next we check the shut-down rule. Dans average cost function is AC(Q) = Q/2 + 50/Q. Solving
for Q such that
Solution to In-Text Exercise 14.2:
At prices below $0.50, no one wants to make and sell brownies, but at prices above $0.50, all 50
firms want to make and sell brownies. Therefore, the market supply function is
(
cfw_
)
If there are 100 brownie manufactu
Solution to In-Text Exercise 14.3:
We can find the efficient scale of production by setting MC equal to AC:
or, rearranging:
Solving, we find that Qe = 10. The efficient scale of production is therefore 10 pizzas per day.
The AC (or MC) is equal to $10 at
Solution to In-Text Exercise 9.2:
Dans best positive sales quantity is determined by the quantity rule, so we set P = MC:
15 = 5 + (Q/40)
Solving this equation we find that Q = 400.
There are three possible ways to check the shut-down rule, which here sho
Solution to In-Text Exercise 9.1:
We answer the last question first. The inverse demand function is the demand function
rearranged and solved for P:
P(Q) = 225 (Q/2)
The price P needed to sell 100 benches per week is 225 (100/2) = $175. The price P requir